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Are You At Risk?

Planning for the undesired, accidents and possible unknowns in life. Recently, a remote friend of mine died during an accident. I donít feel particularly sad, but I was shocked to know because the scenario was quite dramatic.


Whose responsibility is this when accidents happen? A more appropriate question should be: What to do and how to do BEFORE life-threatening accident happens.


To be more practical, have you prepared yourself a will?


I am not an estate planning lawyer/ specialist and thus in no position to advise anyone how to prepare a will. Seek a trustable lawyer (estate lawyer) and get yourself a valid will.


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Sidebar:
If you are in the States, read this article on estate planning/ will preparation =>http://www.pueblo.gsa.gov/cic_text/money/estate/estate.htm
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You should inform your closest relative(s), where your important info is, e.g. insurance documents, valid will, asset-related passwords, banking info and etc. It can save a lot of unnecessary work, pressure and worries, for your family members.


Getting yourself an insurance policy.


Or is insurance - a need or a want? It can be both.


For needs:


Maybe you have unpaid mortgage, unsecured debts and etc. Then you may need a life insurance policy to satisfy those needs. Depending where you are, medical costs can be sky-high and a medical insurance can be a god-sent.


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Sidebar:
You should first identify your needs (life, medical, and disability). Every aspect involves specialization. Check out my other articles for general background info.


Bear in mind that you should always discuss with your spouse or closest relatives, in order to map out the whole picture. Itís their ďbusinessĒ when accidents occur.
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For wants:


You may have un-fulfilled dream, if you were to die before your wish being realized. You have to specify that in your will/ insurance policy. Seek your lawyer/ insurance specialist for more advice on this.


Seeking for an independent advice:


I have served in insurance industry for 5 years. I have not met an insurance agent who knows your need better than yourself. Almost everyone is vested with his/ her own interest, one way or the other. Seeking for an independent insurance advice is the best way to go. No matter how much you are willing to pay for excellent independent advice, itís hard to find one. One way to go is by hiring a fee-based advisor, instead of a commission based advisor.


Insurance broker or insurance agent:


Buying from a broker can be advantageous. If you are buying from a broker, make sure the broker is an established one. As for buying from an agent, you will be bound by his/ her advice limited to one insurance company. Factors to consider when choosing an insurance company:


You should check the insurance company financial strength before considering an insurance plan. This is a job you need to do it yourself. Checking the financial status of each prospective insurance company is vital. To your dismay, a company with too good rating may not be desirable as it may imply that the company is over cautious with claims. It could also mean the premium is over priced. In my opinion, an insurance company with AA rating in Standard and Poor/ AM best is a reliable indicator. Insurance plan: An agent may move from one company to another, but not your insurance company nor your insurance plan. Check the 3 factors before rushing to buy an insurance plan. They are flexibility, functionality and affordability.


Any insurance policy is a business policy for the insurance company. If an insurance plan does not sound for the insurance company, it will not be in existence in the first place. By that I donít mean insurance schemes are ripped-offs. It just means that we have to know the game plan before investing. Understanding different features of insurance plans is beyond the scope of this article.


Roy Chan

Certified Financial Planner and Business Consultant
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